EDITORIAL: Halifax Health must deliver full accounting

Hospital officials need to explain to the public the policies and decisions that resulted in the institution having to pay more than $100 million in settlement costs and legal fees.

OUR VIEW

A second settlement between Halifax Health and a whistleblower, pending government approval, has resolved the hospital's legal and financial issues stemming from a 2009 lawsuit.However, it should not close the book on how Halifax got into such a costly predicament. Hospital officials need to explain to the public the policies and decisions that resulted in the institution having to pay more than $100 million in settlement costs and legal fees. There must be a full accounting — and accountability.The settlement revealed Friday concluded the second and final phase of a lawsuit brought against Halifax Health by Elin Baklid-Kunz, the hospital's director of physician services. In the first phase, she alleged that the hospital's method of compensating its cancer doctors violated the federal Stark Law. In March, Halifax Health settled that portion of the case, which was joined by the U.S. Department of Justice, by agreeing to pay $85 million ($20.8 million of which went to Baklid-Kunz and her attorneys, the rest to the federal government) and to submit the hospital to greater scrutiny by federal regulators for the next five years.In the second phase, Baklid-Kunz alleged that the hospital from 2002-2013 overbilled Medicare by $72.5 million by admitting patients for unneeded hospital stays of two days or less, and that the facility failed to maintain a sufficient compliance department to ensure it was abiding by federal rules and regulations. Halifax has agreed to pay $1 million to settle those claims, although as of late Friday other terms of that agreement had not been made public while both sides await federal blessing.In addition to the settlement costs, the hospital has incurred more than $23 million in legal fees. All told, that's a significant sum to pay and a blow to the hospital's financial health. It has forced the facility to dip into an account set aside to replace aging equipment and other assets, and it led to Halifax Health's credit rating being downgraded from BBB+ to BBB.How did Halifax Health wind up in this position? Was it merely a failure of policy — good intentions gone awry? Was it mismanagement of a problem — a failure to address issues prudently and allowing them to grow? Or was it a combination of both?For example, in the Medicare phase, hospital officials were made aware of Stark Law violations by their own in-house counsel. Nevertheless, they sought an outside legal opinion that concluded the arrangements could be defended in court but gave no assurances that a judge or jury would agree that the physician payments were legal — not exactly a ringing endorsement to proceed with the legally questionable policy. Yet, officials chose to go with the opinion that perhaps told them what they wanted to hear.The hospital did not self-report these violations to the federal government nor did it seek guidance from the Department of Health and Human Services on how to comply with a law that contains numerous shades of gray, moves that might have resulted in a much less severe penalty for the hospital.Why was that opportunity missed?With regard to the second phase, a 2008 memo from George Rousis, Halifax Health's compliance officer, on behalf of David Davidson, the hospital's general counsel, raised yellow flags about “financial exposure to Halifax arising from medically unnecessary admissions.” Among Rousis' concerns was “anecdotal evidence that inpatient admission decisions are based solely on reimbursement concerns.”How did hospital administrators respond? What officials were in the decision loop? Was the hospital's board of directors thoroughly informed at every step? Did anyone object to the actions Halifax Health took? The public deserves to know the answers because it has a stake in the hospital.Halifax Health is partially funded by a local ad valorem taxing district (it comprised 2.5 percent of the hospital's Fiscal Year 2014 operating revenues) and is governed by a public board. Plus, the dispute involved public funds (Medicare). The hospital also plays a vital role in the area's health care and economy. However, it's not just a matter of being responsible for public dollars. Hospital officials also have an obligation to maintain the public's confidence and trust in their management and leadership.Seeking accountability is not an attack on the hospital or its staff, nor does it discount the good work they perform for the community. On the contrary, a transparent accounting will help ensure that Halifax Health remains a vibrant asset by never going down this path again.The hospital's leadership, from the CEO to board members, must provide an honest public vetting, or the public will see right through it.